World Report Li Xiang in Paris

I recently attended a forum of Chinese investors organized by the Invest in France Agency, a governmental body that promotes international investment in France.

Soon after I sat down, I noticed that a poster behind the podium advertising France as an attractive investment destination was in Japanese.

The poster was later removed by the French organizer, but it is clearly a reflection of the embarrassment and challenges Chinese companies may face when investing in European countries such as France due to cultural, business and political differences.

You could tell by listening to a speech by IFA President David Appia that France is willing or even eager to see more Chinese investment, especially at a time when the eurozone is grappling with a deepening debt crisis.

The French economy is barely growing as exports and consumption have deteriorated and businesses have cut back their investment. It has also struggled with an unemployment rate as high as 10 percent.

So France is happy to see investment from cash-rich emerging economies such as China as it will create wealth and jobs in the country. But on the other hand, it tends to be conservative or even protectionist when it feels its own industries are threatened by foreigners.

Lately, the rumor that the European Union plans to launch an anti-dumping case against Chinese telecom equipment makers Huawei and ZTE has received a lot attention from French media. The dispute illustrates that Chinese companies still face a tough situation when expanding their footprint globally.

"Helping Chinese companies invest in France is a challenge," Helene Rives, tax partner and head of China business group at French law firm Landwell & Associes, told me during a tea break at the forum. "The French can be bureaucratic, and they are less willing to see foreign investors given that the current economic condition is not good."

And that's probably the irony of globalization. Yes, in theory, we all know how France's infrastructure and technology know-how coupled with Chinese capital can make a win-win deal for both sides. But things can be quite different when it comes to real business.

France's rigid employment system, immigration policies and bureaucratic and tedious administrative procedures can pose major hurdles for Chinese companies.

During a discussion on French immigration and visa policies at the forum, journalists were even asked to leave the conference room. Apparently, French immigration officials were not well-prepared on how to present themselves in front of the media.

"It can take a very long time for Chinese employees to obtain their resident permits here in France. And you want to apply for your medical insurance? Wait for at least one year," said a representative of a Chinese company in France.

"The French employment system is so rigid that it's like the 'iron rice bowl' system - meaning that a company can hardly fire any contracted employees. Even China has abandoned it long before," he said.

The change of the political landscape is also a concern for Chinese companies as some have begun to worry about a potential corporate tax increase by the Socialist government led by the newly elected President Francois Hollande.

In 2011, Chinese investment accounted for 2.4 percent of France's total foreign direct investment in terms of the number of the projects, which means further growth can still be expected. What France needs to ensure is a favorable investment policy that can work well and be effectively executed in reality.

Contact the writer at lixiang@chinadaily.com.cn

(China Daily 06/13/2012 page12)